Blockchain Smart Contracts For International Trade: A Transaction Cost Analysis

Philip Wier Højlund & Lasse Schriver Nielsen

Student thesis: Master thesis

Abstract

International trade may be facing a new cost revolution with the emergence of blockchain-enabled smart contracts. Claims that they can reduce transaction costs are becoming widely accepted, but international trade transactions can be complex. Using transaction cost economics, we answer how smart contracts can govern transactions in international trade. This paper is a maximum variation case study of international trade primarily based on 36 interviews with smart contract and industry experts. We identify characteristics of complex transactions based on transaction cost economics and build three hypothetical trade scenarios of simple, mixed, and complex transactions based on standard industry practices. We argue that smart contracts can be used to economise on transaction costs for transactions of simple to mixed complexity, particularly with the help of renegotiation mechanisms, but do not eliminate the need for integration in complex transactions. Design principles are extrapolated, and implications for practice are discussed

EducationsMSc in International Business and Politics, (Graduate Programme) Final ThesisMSc in International Business, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2019
Number of pages93
SupervisorsNicolai Pogrebnyakov